Sappi Limited · JSE:SAP
Sappi — Q1 2013 Earnings Presentation
29 slides from Sappi's earnings presentation, Feb 6, 2013
Slide 1: 1st Quarter 2013 Financial Results Presentation
1st Quarter 2013 Financial Results Presentation 6 February 2013
Slide 2: Forward looking statements
Forward looking statements Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends,
Slide 3: Summary
Summary | Q1 2013 Results | 6 February 2013
Slide 4: Q1 2013 Summary
4 Q1 2013 Summary • Profit for the period US$17m (Q1 2012 US$45m) • EPS 3 US cents (Q1 2012 9 US cents) • Operating profit excluding special items US$73m (Q1 2012 US$100m) • Net finance costs of US$42m (Q1 2012 US$54m) • Net Debt US$2,095m (Q1 2012 US$2,175m) | Q1 2013 Results | 6 February 2013
Slide 5: Operating Profit excluding special items
5 Operating Profit excluding special items* 2010: $339m 2011: $404m 2012: $403m 160 140 120 100 80 137 129 127 125 60 118 100 40 81 75 80 73 54 60 60 20 0 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 2013 *Refer to the supplementary information in this presentation for a reconciliation of
Slide 6: EBITDA Trend
6 EBITDA* Trend 2010: $752m 2011: $821m 2012: $772m 300 250 200 150 246 227 228 217 100 211 193 183 194 176 164 156 150 162 50 0 Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 2013 *Refer to the supplementary information in this presentation for a reconciliation of EBITDA excluding special
Slide 7: Divisional Overviews
Divisional Overviews | Q1 2013 Results | 6 February 2013
Slide 8: Divisional Operating Margins
8 Divisional Operating Margins* 20.0% 15.0% Q1 ‘13 Margins: 10.0% S‐Africa 10% 5.0% N‐America 5.2% Europe 2.6% 0.0% ‐5.0% Q1 Q2 Q3 Q4 Q1** Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 2013 *The divisional operating margins exclude special items. Refer to page 14 in our Q1 2013 results announcement booklet
Slide 9: Sappi Fine Paper Europe
9 Sappi Fine Paper Europe • Challenging market conditions, yet volumes similar to last year. • Prices under pressure in competitive marketplace • Price increases announced for January, expect realization throughout the quarter • Strong cost control; variable costs down 2% from a year ago while fixed
Slide 10: Sappi Fine Paper North America
10 Sappi Fine Paper North America • Good performance from the coated paper business • Higher volumes offset partially by lower average sales prices from last year • Average realised pulp prices were 5% lower than last year, and 3% lower than last quarter • Volumes were also down in our pulp business
Slide 11: Sappi Southern Africa
11 Sappi Southern Africa • Specialised Cellulose volumes were flat year on year as all available production was sold • Average sales prices for specialised cellulose were down 12% year on year as benchmark NBSK prices fell • Paper business performance improves compared to last year, and last quarter
Slide 12: Strategic Focus
Strategic Focus | Q1 2013 Results | 6 February 2013
Slide 13: Strategic Focus
13 Strategic Focus Refined strategy has 3 themes: • Focused, low cost paper businesses with reasonable margins and strong cash flows • Growth in profitable specialised cellulose based solutions • Healthy balance sheet Accelerate our drive toward increased profitability, earnings growth, and a strong
Slide 14: Focus Areas
14 Focus Areas Focused, low cost paper businesses • Encouraged by progress in our European and South African paper businesses, more to come via Alfeld conversion, further benefits in South Africa • N.American paper business continues to perform well. Somerset upgrades lead to further efficiencies Gr
Slide 15: Net Debt Development
15 Net Debt Development Net Debt rises on seasonal working capital movements and increased capital expenditure 3,000 2,500 2,000 1,500 1,000 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 | Q1 2013 Results | 6 February 2013
Slide 16: Debt Maturity Profile
16 Debt Maturity Profile Includes 2019 2017 $300m Bond 2021 $400m $350m Bond Includes 2018 Bond €250m Bond 2032 $221m Bond * ZAR450 million ($53 million) drawing under the new evergreen ZAR1 billion South African Revolving Credit Facility. In addition, the €350m International Revolving Credit Facili
Slide 17: Outlook
Outlook | Q1 2013 Results | 6 February 2013
Slide 18: Outlook
18 Outlook • FY2013 is, and will continue to be, an important and transitional year for us as we expand our Specialised Cellulose operations and further optimise our paper businesses • European business is expected to continue to face headwinds throughout the year. Rising input costs, particularly p
Slide 19: Q&A
Q&A | Q1 2013 Results | 6 February 2013
Slide 20: Supplementary Information
Supplementary Information | Q1 2013 Results | 6 February 2013
Slide 21: W. Europe Coated Paper Deliveries & Prices
21 W. Europe Coated Paper Deliveries & Prices 1.2 1.1 1.0 0.9 Q1 2008 = 1 0.8 0.7 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 CWF MCR CWF 100gsm sheets prices LWC 60gsm offset reels prices Western Europe Shipments Incl. Export – Source Cepifine, Cepiprint
Slide 22: Sappi Fine Paper Europe
22 Sappi Fine Paper Europe Q1 12 Q4 12 Q1 13 YoY Tons Sold ('000) 849 896 849 Sales ($'m) 846 826 799 Price / Ton ($) 996 922 941 Price / Ton (€) 739 737 726 Cost / Ton* (€) 714 697 707 Operating profit ex items** ($'m) 29 45 21 * Sales less operating profit excluding special items divided by tons s
Slide 23: US Coated Paper Prices and Shipments
23 US Coated Paper Prices and Shipments 1.2 1.1 1.0 0.9 Q1 2008 = 1 0.8 0.7 0.6 0.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2009 2010 2011 2012 Domestic CFS shipments Total US CFS consumption CFS #3 60lb Rolls prices US Industry Shipments and total US consumption – Source AF
Slide 24: Sappi Fine Paper North America
24 Sappi Fine Paper North America Q1 12 Q4 12 Q1 13 YoY Tons Sold ('000) 339 369 334 Sales ($'m) 352 377 346 Price / Ton ($) 1,038 1,022 1,036 Cost / Ton* ($) 1,009 908 982 Operating Profit ex items** ($'m) 10 42 18 * Sales less operating profit excluding special items divided by tons sold. ** Opera
Slide 25: Pulp Prices
25 Pulp Prices* US$/ton 1,100 NBSK (US$/ton) BHKP (US$/ton) 1,000 900 $812/ton 800 $778/ton 700 600 500 400 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-12 Jan-13 Jan-11 * Source: Average monthly FOEX delivered European prices | Q1 2013 Results | 6 February 2013
Slide 26: Sappi Southern Africa
26 Sappi Southern Africa Q1 12 Q4 12 Q1 13 YoY Tons Sold ('000) 400 423 380 Sales ($'m) 368 361 310 Price / Ton ($) 920 853 816 Price / Ton (ZAR) 7,444 7,046 7,095 Cost / Ton* (ZAR) 6,210 6,402 6,386 Operating Profit ex items** ($'m) 61 33 31 * Sales less operating profit excluding special items div
Slide 27: Cash Flow
27 Cash Flow Q1 12 Q4 12 Q1 13 Cash generated from operations 195 182 150 - Movement in working capital (166) 115 (130) - Net finance costs paid (64) (38) (59) - Taxation paid (5) (8) (10) - Cash utilised in investing activities (71) (48) (53) Cash flow after investing activities (111) 203 (102) | Q
Slide 28: Reconciliation of EBITDA excluding special items to profit for the period
28 Reconciliation of EBITDA excluding special items* to profit for the period Q1 12 Q4 12 Q1 13 EBITDA ex. special items 194 211 162 Depreciation and amortization (94) (93) (89) Operating profit ex. special items 100 118 73 Special Items 7 42 (3) Plantation price fair value adj. 3 9 8 Net restructur
Slide 29: Thank You
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